PerkinElmer has achieved 65% organic growth in the fourth quarter, beating the consensus analyst estimate to reel in almost $1.4 billion.
The growth was driven by a triple-digit surge in sales at PerkinElmer's diagnostic unit, which benefited from continued demand for COVID-19 tests. The company reported $549 million in COVID-19 revenues in the quarter, primarily due to sales of PCR tests and RNA extraction products.
PerkinElmer expects a similar level of COVID-19 sales in the first quarter but a drop off beyond that, leading it to predict its pandemic-driven revenue in 2021 will be comparable to that of last year. With demand for non-coronavirus products tipped to recover, PerkinElmer expects up to 5% organic growth this year.
PerkinElmer saw explosive growth in parts of its business in the fourth quarter. Immunodiagnostics sales grew 250% as the non-COVID-19 portion of the business rose to 90% of normal in Europe and the Americas and demand for products used in the COVID-19 response remained elevated.
Applied genomics beat even that rapid growth, reporting a 420% jump in sales. Jamey Mock, chief financial officer at PerkinElmer, told investors the growth was due to "broad based momentum across all geographies with strength in our nucleic acid extraction, liquid handling and sample prep product lines." Nucleic extraction sales were 12 times that of the fourth quarter of 2019.
The big unknown is how long PerkinElmer and its peers will continue to generate significant sales from the COVID-19 testing.
"Our assumption in this guidance is that the vaccine kicks in and that the second half's revenue and testing come down substantially. And you can see that by evidence that almost 50% of the revenue is here in the first quarter. We feel like that's a conservative assumption, but one that we are confident in," Mock said.
However, despite the rollout of coronavirus vaccines, Abbott, Hologic and Quidel are all ramping up their manufacturing capabilities in anticipation of another banner year for COVID-19 testing. Abbott CEO Robert Ford said at last month's J.P. Morgan conference that he expects high demand and volume for tests throughout 2021.
The persistence of PerkinElmer's COVID-19 tailwind will partly depend on a U.K. testing contract ending in March. The U.K. could extend the contract but as it stands the work is set to cease at the end of next month, leading PerkinElmer to only factor the business into its projections for the first quarter.
PerkinElmer is talking up its prospects of thriving even if, as it assumes, the acute phase of the crisis abates this year. Like other diagnostics businesses, PerkinElmer is looking to the equipment sales and changes in thinking about testing that took place in 2020 to drive growth in years to come. Last year, the company installed more than 1,000 chemagic systems and 600 liquid handlers.
The acquisitions of Horizon Discovery and Oxford Immunotec will provide PerkinElmer with further opportunities to grow sales. Despite the back-to-back acquisitions, PerkinElmer remains on the hunt for new takeover targets.
"Our priority will remain on M&A," PerkinElmer CEO Prahlad Singh said. "I think our appetite is pretty good. And I think we will be acquisitive in 2021."